Dow jumps 700 points, Nasdaq rises 2.5% after cool CPI reading
U.S. stocks edged higher on Wednesday, buoyed by strong expectations for bank earnings and a key consumer inflation report.
The benchmark S&P 500 (^GSPC) popped more than 1.8%, while the Dow Jones Industrial Average (^DJI) rose more than 1.6%, or more than 700 points. Meanwhile, the tech-heavy Nasdaq Composite ( ^IXIC ) rose 2.5 percent.
Stocks edged higher after the Consumer Price Index (CPI) showed progress toward the Fed’s 2 percent inflation target in December.
Prices rose 0.2% on the month in the “core,” which strips out more volatile food and gas costs, adding to November’s 0.3% gain. Core CPI rose 3.2 percent last year.
As of last publication, the annualized core CPI was stuck at a 3.3% gain for the past four months. December is the first time since July that the gauge has shown price growth.
^ DJI ^IXIC ^GSPC
The 10-year Treasury yield ( ^TNX ) fell more than 13 basis points to trade at 4.65% after a cooler-than-expected reading. It has reached its highest level in over a year, serving as a headwind for stocks. Interest-rate small-cap Russell 2000 Index (^RUT) rose in response, rising nearly 2%.
Traders still see only a 3% chance the Fed will cut rates in January. The CME FedWatch tool. they It is divided on whether cuts will come in the middle of this year; With the chances of cooling off in June, it’s not seen as likely now.
Read more: What Fed Rate Cuts Mean for Bank Accounts, CDs, Loans and Credit Cards
Spirits also got a boost from Wall Street bank earnings reports, thanks to a revival in communications and investment banking strength. JPMorgan Chase ( JPM ) met bullish analyst expectations with a second consecutive year of record profits, while Goldman Sachs ( GS ) beat profit estimates. BlackRock ( BLK ), Wells Fargo ( WFC ) and BNY ( BK ) also booked defensive quarters.
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